Entertainment Industry Bucks Trend, Gears for Expansion

“Hooray for Hollywood.”

That’s the song some commercial real estate brokers and developers are singing these days.

Two years ago, law firms, accounting offices and banks seemed to be filling almost endless blocks of new office space. The trend has been slowing--along with the economy--and many in the real estate business find themselves saddled with too much supply and not enough demand.

But it’s a different story for the entertainment industry, which, stronger than ever, is driving some of the biggest development and lease deals in Los Angeles this year.

Almost every movie studio in town is planning an expansion, and many smaller production, management, consulting and distribution companies are in the market to lease or buy sizable chunks of commercial space.

At entertainment enclaves such as Universal City, Maple Plaza in Beverly Hills and selected buildings in Burbank’s Media District, for example, there’s virtually no space available, and landlords have waiting lists.

“The entertainment industry is one sector of the economy that hasn’t suffered a downturn,” said Robert Waller, a broker at Coldwell Banker Commercial Real Estate, Century City.

Longtime office tenants in Hollywood want to lease space all over town, Waller said, and many companies are shopping for small industrial facilities that can be bought at a favorable price in today’s market.

Helping fuel these relocations is an undersupply of quality space in Hollywood, said Les Small, president of Entertainment Realty Corp. in Century City. “Lack of redevelopment in Hollywood has forced entertainment firms to go elsewhere,” he said.

It’s been almost 20 years since the construction of any major new office buildings in Hollywood. With many entertainment companies acutely in need of elbow room, Small said, “we can’t find good-quality space in Hollywood at any price.”

Here are some of the many real estate ventures of the entertainment industry:

--The Walt Disney Co. has been so active in development over the last five years that some critics have assailed its projects as symbolic of a “Disneyization” of architecture.

In Burbank, the company recently completed a 320,000-square-foot headquarters building complete with 19-foot-high dwarfs holding up the roof. Now the entertainment giant hopes to add another 1.15 million square feet of space on its 44-acre lot.

Disney wants quick approval of its new development plan by Burbank city officials. The company hopes to avoid any building constraints that could be imposed with the passage of Measure 2--a growth-limiting initiative set to appear on Burbank’s February ballot.

Office space continues to be in short supply for Disney and its various units.

The company recently signed a lease with CMS Development to occupy a 115,000-square-foot building under construction at Olive Avenue and Buena Vista Street in Burbank. The new Carnation Building in Glendale opened its doors in November 94% preleased--thanks in part to a 98,000-square-foot lease by Walt Disney Imagineering.

All told, Disney has leased, subleased or preleased more than 500,000 square feet of commercial space in the last 12 months, reported Julien J. Studley Inc.

Finally, both Anaheim and Long Beach are in the running for yet another theme park. Port Disney, a $2-billion, marine-inspired creation on 350 acres in Long Beach, could include five new hotels, restaurants, various tourist attractions and a marina.

--NBC and Cushman Investment & Development Corp. are planning the 790,000-square-foot NBC Plaza office complex in Burbank. Cushman previously developed the nearby Disney Channel Building.

--Columbia Pictures Entertainment Inc. and its parent, Sony, are proposing a 15-year building plan in Culver City.

Columbia wants to expand the 1.53 million square feet of commercial space on its 44.7-acre lot along Washington Boulevard to about 2.5 million square feet by 2005.

The Culver City Planning Commission and Redevelopment Agency are considering whether to approve the project--which would include twin nine-story office buildings, small landscaped parks, a 19th-Century Town Square and new sound stages.

And Columbia is swapping space it now occupies on the Warner Bros. lot in Burbank with Lorimar Television, which, in turn, is leaving the Columbia lot in Culver City and is relocating to the Warner lot.

Meanwhile, Tri-Star Inc. will fill some of the space left by Lorimar at the Columbia lot.

If all this isn’t confusing enough, Columbia has plenty of other offices scattered throughout Los Angeles.

The company occupies big chunks of space at Sunset-Gower Studios in Hollywood and in Studio Plaza at 3400 Riverside Drive in Burbank, just across the street from Warner Bros. That building, which will serve as corporate headquarters for Columbia, is owned by Columbia’s former owner, the Coca-Cola Co.

Just a few blocks away, Columbia is filling 45,000 square feet of space at MCA’s One Lakeside Plaza in Universal City. The recently signed lease is valued at about $7.4 million.

“It gets quite expensive running multiple locations,” said Kenneth S. Williams, senior vice president of finance and administration at Columbia. That, he said, makes it imperative for the company to expand in Culver City and consolidate what he described as “far-flung” operations.

--Warner Bros. Inc. is still contemplating what to do with space being vacated at its Burbank studio by Columbia. No final plans have been announced, but some construction at the studio is expected.

--Paramount Pictures on Melrose Avenue in Hollywood is not talking about a rumored 250,000-square-foot office tower on its lot. The studio has been buying adjacent properties over the last year in anticipation of an expansion. Just how soon any of this will happen is unknown.

Currently under construction at Paramount’s lot, though, is a 55,000-square-foot office building to house the company’s domestic television division and its planning and development units.

--Fox Inc. wants to add 771,000 square feet of new construction to its 54-acre lot in Century City. The plan is to expand the studio from its current 1.1 million square feet of space and move some of the Fox operations now in Hollywood at Metromedia’s property.

Nearby residents will want their say before any final plans are made, however. Accordingly, Fox has begun a public relations campaign to win the support of growth-control groups such as Friends of Westwood.

--MCA Development Co. of Universal City is building City Walk--a 200,000-square-foot retail/entertainment complex worth about $100 million. MCA is also rebuilding the structures lost in a spectacular election night fire.

In 1959, MCA paid about $11.25 million for 360 of its 420-acre holdings in Universal City. Today, it’s worth an untold fortune. Universal City’s 1.5 million square feet of office space is reportedly 100% occupied.

MCA has ample room for expansion, and Wall Street analysts have long maintained that the company’s landholdings represent a strong opportunity to enhance MCA shareholder value. The fate of any such expansion may now be in the hands of Matsushita Electric Industrial Co. of Japan.

--Raleigh Studios recently completed a six-year expansion in Hollywood with three new buildings along Melrose Avenue. A spokesman reported the studio is looking to buy more property, since its rented facilities are more than 95% occupied.

--Tribune California Properties (a unit of Tribune Broadcasting) is in the midst of planning a four-phase development for its Hollywood property at 5800 W. Sunset Blvd. The 10.21-acre site is home to KTLA, KMPC, Grant Tribune Productions and Tribune Entertainment.

If Tribune gets its way, the new construction would begin on a 600-car parking lot, a 20-story, 324,000-square-foot office tower, four new sound stages, and finally, a 16-story, 332,000-square-foot office tower.

--At Hollywood Center Studios on North Las Palmas Avenue, work is expected to commence within the next six months on a 40,000-square-foot office building. New stages are also being contemplated.

--Pathe Communications Corp. plans to make its home at 6420 Wilshire Blvd., adjacent to Beverly Hills.

The 20-story building was bought in September for a reported $24 million by an affiliate of Pathe and an affiliate of Arden Investment Group--headed by Victor J. Coleman and Richard S. Ziman, managing partner of Pacific Financial Group.

Pathe--which recently acquired MGM/UA Communications--plans to completely remodel the Wilshire Boulevard tower.

Finally, the William Morris Agency is completing the William Morris Rodeo Building in Beverly Hills. This is the third office building developed and owned by the talent agency within a two-block radius. The newest building was built for investment purposes and is being marketed to other entertainment tenants.

For those entertainment companies with neither the land nor the interest nor the funds to build or buy new space, there’s always the option of leasing.

The J.H. Snyder Co. has created a new enclave of entertainment tenants in the Miracle Mile district of Los Angeles with such buildings as Museum Square, the Wilshire Courtyard, the soon-to-be rehabbed Cal Fed Building and a new office tower slated for development.